5 Facts: PetroCaribe

The photo above shows the late President of Venezuela, Hugo Chavez and the past Prime Minister of Jamaica, PJ Patterson moments after signing the first PetroCaribe deal in 2005. With the passing of Venezuela’s President, Hugo Chavez, many are unsure about the stability of the PetroCaribe deal.

What is PetroCaribe deal and what does it entail? How does this deal affect Jamaicans?

For a greater understanding of PetroCaribe, here are 5 facts:

The objective of PetroCaribe is to alleviate the burden of rising oil prices and its negative impact on Caribbean countries. PetroCaribe is an agreement Venezuela and some Caribbean territories that allows Caribbean nations to purchase oil on preferential payment conditions.

Venezuela and 13 Caribbean countries signed multilateral agreements on July 29, 2005.

Nations under this agreement, are allowed to purchase 185,000 barrels of oil per day on preferential terms, Additionally, these nations could settle their debt to Venezuela using goods and services.

The PetroCaribe agreement with Venezuela allows Jamaica to buy crude oil by paying only a part of the cost up front. The difference is loaned to Jamaica by Venezuela at a low interest rate for up to 25 years. This is the PetroCaribe Development Fund, PDF.

The PetroCaribe Development Fund is the largest source of concessionary loan financing available to the Government. Between 2006 and 2011 Jamaica’s total liabilities to Venezuela under the PetroCaribe Development Fund (PDF) amounted to J$164 billion. The money from the fund has been used to expand and upgrade roads, infrastructure and the Petrojam Refinery Upgrade Project.